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These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). For example, the Globe Life Inc. (NYSE:GL) share price is up 62% in the last 1 year, clearly besting the market return of around 7.7% (not including dividends). If it can keep that out-performance up over the long term, investors will do very well! However, the longer term returns haven't been so impressive, with the stock up just 25% in the last three years.
So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress.
Our free stock report includes 1 warning sign investors should be aware of before investing in Globe Life. Read for free now.
To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
During the last year Globe Life grew its earnings per share (EPS) by 17%. This EPS growth is significantly lower than the 62% increase in the share price. So it's fair to assume the market has a higher opinion of the business than it a year ago.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. Dive deeper into the earnings by checking this interactive graph of Globe Life's earnings, revenue and cash flow.
A Different Perspective
It's nice to see that Globe Life shareholders have received a total shareholder return of 64% over the last year. That's including the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 10% per year), it would seem that the stock's performance has improved in recent times. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For example, we've discovered 1 warning sign for Globe Life that you should be aware of before investing here.